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New Trends in Supermarket Retail

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					  Is there a Place for
Indigenous Retailers In
         Asia?
      A presentation by
    Mr Seah Kian Peng
  Deputy CEO, NTUC FairPrice
The Globalization of
the Retail Industry
Globalization of Retail
       Industry

•   Asian Currency Crisis
      Weakened local retail groups
      Acquisition by big players

•   Liberalization of Retail Industry
      Falling property prices and
       easing of restrictions

•   New Retail Formats
      Globalization of Retail
             Industry
    Convergence of global retail players
    20 global retailers dominating world
     market in 10 years’ time
    Foreign competition displacing local
     players
    Foreign Sales as % Total   2000   2001   2002
             Sales

Carrefour                      38%    48%    49%
Metro AG                       33%    44%    46%
Tesco                          8%     10%    18%
Wal-mart                       14%    17%    16%
     Globalization of Retail
            Industry
   No major indigenous retailer in
    Thailand and Malaysia
   Small retailers lobbied for government
    assistance in Thailand
   Malaysian government imposed
    controls on hypermarkets
   Dairy Farm bought Giant (Malaysia)
    and Hero (Indonesia)
   Only 2 indigenous retailers left in
    Indonesia – Ramayana and Matahari
Globalization of Retail
       Industry
 Started in 1973 as a co-operative
   supermarket, amidst oil crisis

 Social role of combating inflation and
   moderate cost of living for workers

 Today, NTUC FairPrice Group is
   leading food retail chain with more than
   50% market share
   71 supermarkets under flagship
    banner FairPrice
   Started 24-hour convenience stores 4
    years ago under banner of Cheers
   Cheers now has close to 40 stores
   Country theme store called Liberty
   No-frills discount stores called
    Foodland
   Store-within-a-store concepts
   China JV that manages retail chain
    and shopping malls
   Formed strategic alliance with
    ExxonMobil to operate c-stores in
    service stations
   Also operates warehousing and
    distribution company, trading company
    and buying offices in Malaysia,
    Thailand and China
Singapore Grocery Retail
        Market
       Singapore Retail Market

        Before 1997                                2003
  Retailer       Country of            Retailer           Country of
                   Origin                                   Origin
   NTUC           Singapore             NTUC              Singapore
 FairPrice*                           FairPrice*
Cold Storage+    Hong Kong          Cold Storage+         Hong Kong
Prime Mart*       Singapore         Shop N Save+          Hong Kong
 Emporium        Hong Kong             Giant+             Hong Kong
  SMART          Indonesian           Carrefour            France
  * denotes Singapore owned
  + denotes owned by Hong Kong based Dairy Farm International Group
    Singapore Retail Market

   In Singapore, apart from FairPrice, other
    key players are foreign owned
   FairPrice leads market with annuals
    sales of US$706 million, more than 50%
    market share
   Total grocery market in Singapore is
    US$1.2 billion
Impact of global players
    Impact of global players

   Singapore is a free economy with no
    barriers of entry
   In 1997, Tops (Dutch) and Carrefour
    (French) entered Singapore market
   In 1999, Delhaize (Belgium) took a stake
    of Shop N Save
   In 2000, Giant (acquired by Dairy Farm)
    entered Singapore
   Global players force FairPrice to do
    better
    Impact of global players

   Local small independent retail shops are
    fading out due to competition
   Entry of global players inflated operation
    costs, rents have increased and wages
    were raised
   Survival of the strongest – similar scene
    in furniture industry
   Local players must find niche,
    competitive advantage and improve
    operations
FairPrice’s Solutions
        FairPrice’s Solutions

   FairPrice synonymous with ‘Best Value’
   Focused on reinforcing core competitive
    advantage and market position
   Increase operational efficiency and reduce
    operational costs
   Invested in central warehousing and
    distribution system
   Overseas buying office for more direct
    sourcing
   Harness power of Information Technology
        FairPrice’s Solutions

   Good locations is key
    factor and competitive
    advantage
   Cited as 4th leading
    Singapore company by
    Far Eastern Economic
    Review
                                                                 NTUC                                                      5.4
                                                                Fairprice


                                                          Giant, Malaysia




                                                                                  2.3
                                                                Matahari,




                                                                            1.6
                                                               Indonesia

                                                                 Tesco,
                                                                                         3.0


                                                                Thailand


                                                          SM, Philippines
                                                                                  2.2




                                                          Saigon Co-op,
                                                                                  2.2




                                                             Vietnam

                                                              Carrefour,
                                                                            1.6




                                                               China

                                                             Park&Shop,
                                                                                                       4.3




                                                             Hong Kong
                                                                                                             Store Equity Index




Source: A.C. Nielsen Shopper Trends Study December 2002    E-mart, Korea
                                                                                        2.8




                                                              Carrefour,
                                                                                              3.2




                                                               Taiwan

                                                            Woolworths,
                                                                                                      4.1




                                                             Australia

                                                            Pak n Save,
                                                                                                3.5




                                                            New Zealand
        FairPrice’s Solutions

   Strong and established branding of
    FairPrice
   Top-of-the-mind brand among consumers
   Store brand equity highest amongst Asia
    Pacific retailers
   Result of efforts in fulfilling social role,
    activities in public relations and marketing
    campaigns
   Innovate – Find Competitive Edge – Serve
    Niche
Thank you

				
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posted:9/9/2011
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